SaaS Subscription Billing Lessons from Chargebee's Journey

Omer (00:11.360)
Welcome to another episode of the SaaS Podcast.
I'm your host Omer Khan and this is a show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business.
On this episode, I talk with Krish Subrahmanian, the co founder and CEO of chargebee, a platform that automates subscription management and billing for SaaS and e commerce businesses.
Chargebee was founded in 2011 and is based in Chennai, India.
To date, the founders have raised $6 million in funding but bootstrapped the business for the first year and a half.
We talk about the challenges faced by SaaS businesses in managing subscriptions and recurring billing scenari and we explore how Chargebee is solving those problems and helping SaaS businesses to reduce customer churn.
The founders knew they wanted to work together, but it took them 10 years to save up enough and have the courage to finally take the leap and quit their jobs.
And it took them over a year to launch their MVP because they tried to build too many features.
We talk about the lessons they learned from this experience and how they do things differently now.
We also explore what it's like to build a SaaS business in India.
You don't have the benefits of being in Silicon Valley and you're trying to convince SaaS and e commerce businesses around the world to manage their revenue on your platform and they face a lot of resistance and challenges along the way.
We talk about how they overcame those challenges and what they've done to successfully get over 6,000 companies around the world using their platform.
I hope you enjoy the interview.
Krish, welcome to the show.

Guest (01:58.130)
Thank you, Omar, thanks for having me on the show.

Omer (02:00.930)
Let's start by getting inside your head a little bit.
Is there a favorite quote or saying that you can share with us that maybe is something that drives or motivates you.

Guest (02:12.290)
So I don't have a favorite quote as such, but what drives me, I'm an engineer and what drives me is problem solving.
Pretty much everything that I look at that is how I look at it, be it the startup idea itself or now the face of actually building a business is actually solving a problem.
So it's not exactly a quote, but what drives me every day is the passion to just solve a problem.

Omer (02:36.800)
Love it.
No, that's great.
Okay, so I gave the audience a brief overview of chargebee, but can you explain to us a little bit more about the product and the business?
So what is the problem that you guys are trying to solve and for

Guest (02:52.480)
who the Problem we are solving is taking care of the entire operational piece around tracking who's actually trying your product and at what stage they are subscriber to your service, all the way to invoicing the customer, taking care of taxes compliance and payments collection.
So that is what we now call a subscription billing.
So all these three pieces have always existed, meaning you have always collected payments through payment gateways.
Invoicing has lived in isolation and also continues to remain there in ERPs and then software or any service that you build.
We have always tracked our users.
But the convergence of all these three things is happening in a subscription world where we are tying these things together to deliver a superior experience.
Because now instead of actually collecting payments one time from a customer, we are trying to have a very large customer set that we serve on a continuous basis.
And we are also attempting to collect money from these customers in very small amounts every single month.
And that brings an interesting opportunity where you cannot throw people at the problem and your existing systems cannot solve it.
So that is what chargebee does.
Subscription billing.
Tying these three pieces together, which is all the way from subscription management, recurring invoicing and recurring payments, and consolidating all these pieces into one plug and play solution so each recurring revenue business does not have to reinvent the wheel while trying to build build their business so they can plug in and then start focusing on their customers.
And we help them with all the essential components to help them scale the business.

Omer (04:28.559)
You guys basically sit on top of Stripe or other payment gateways like that, correct?

Guest (04:35.279)
That is correct.
Right.
So we are built on top of payment gateways like Stripe, Braintree, PayPal and about 15 different payment gateways around the world and serving customers in 53 countries.
So wherever your business is incorporated, we facilitate that on top of the payment gateway while streamlining the billing solution.
Billing part.

Omer (04:53.080)
So let's take an example of a SaaS business who maybe isn't using Chargebee today, but should be using Chargebee.
What are the kinds of problems that a business like that would currently be experiencing?

Guest (05:10.520)
So when you start off your business, you have a simple pricing page and you want to collect recurring payments from a customer, and you tend to build that on top of a payment gateway.
So initially it's your business that says, this is what my billing need is.
It's a recurring payment is all you need.
But as your business grows and your customers start coming in, there are more things that actually happen behind the scenes related to your customer experience.
It could be something as simple as saying, now I need to Start sending some invoices to my customers or my customer card has failed.
Now I need to ask my customer to update the payment information.
So each one of these use cases start coming up and then you suddenly land a big customer and they ask you to send an invoice for one year in advance.
Now you're trying to figure out all these things while you are still building the core of your product.
So as we continue to scale our business from the first 10 to 100 and then the hundreds of customers, these billing related or subscription management related use cases pop up.
And we tend to build all these components in house within your code logic and sometimes in Excel sheets.
So all these components tend to start living in different places in your business.
And when you try to look at your metrics, none of them are in one place.
The opportunity or the problem that we are trying to solve is that there is so much broken in terms of how better it can be in terms of the internal billing system.
So the next time your sales team or a product manager says I want to test a new iteration of pricing, you are suddenly thinking, which part of the code do I need to change before I'm able to roll out?
And when am I going to be ready with the pricing changes so that my business will be ready to roll out the new price?
So suddenly your billing starts dictating how your business can be run.
So those are some of the typical challenges that a growing business tends to have.
And once you are scaling beyond the 100 customers, then you hire a finance person, they want all the taxes to be taken care of, care of, pretty much all these additional things, none of them add value to your customers, your real business users.
But you are spending way too much time than your competition fixing these internal things.
Those are the operational inefficiencies that creep into the business, which we solve with a plug and play system.
So it's mostly replacing the internal billing intelligence is what chargeb attempts to do.

Omer (07:32.590)
That's a great explanation.
And I think it's like when you're starting out and you're at very early stage and just still trying to find maybe, you know, your first hundred customers, just using Stripe or something like that is probably fine.
But as your business starts to grow, all the things you talked about, those are good quality problems to have, right?
Because that's a good sign that you're getting customers, your business is growing and that makes a perfect sense that hey, how long do you want to continue trying to code for these scenarios yourselves instead of using a product like chargebee and focusing on the core product that your customers are paying you to use.

Guest (08:13.600)
Absolutely right.
It's a build versus buy conundrum that we all go through all the time.
We all use so many products and we also tend to think about building it as if our problem is unique in the world.
And then we try to reinvent the solution all from scratch.
It's never build versus buy, it's always buy versus build, maintain and then improve.
And nobody in your internal team actually signs up to continue improving something like that.
So they just like to build and move on.

Omer (08:45.550)
Yeah.
One thing I noticed on your website, which I thought was pretty cool, was the way that you provide a plan for startups or for new businesses.
And I thought it was really nice the way that you guys had packaged it up like saying, you know, your first 50k of revenue is yours.
So basically for a new business, they can start using chargebee without paying anything.
And they don't pay anything until they've generated $50,000 in revenue.

Guest (09:15.339)
Right.
So that's exactly.
Actually ties to the point that you just mentioned.
At an early stage, businesses can, they can choose to build on top of payment gateway, but once the business starts taking off, changing your billing system does not become a priority.
You don't even realize where it starts and where it ends.
In terms of this use case is related to billing or probably somebody has built it better.
So we can choose to say, okay, let it become a pain and afterwards they will transition to us.
Or we can choose to say, let me help this business get off the ground right from the idea stage so they don't have to build it.
Then when we are really adding value, they will anyways pay us.
That's the idea behind our freemium model.
It's a selfish move as well from our side because it's a lot of effort for us as a business to discover these early stage companies that are actually going through that growth stage, growth transition and then try and convince them that hey, you are going to run into many of these use cases, why don't you make a transition?
But they're already so deep in actually trying to solve their customer problem and they're actually going through some very good problems at that stage and they are not going to prioritize billing.
So it becomes harder on our side to convince them to actually make a transition to billing.
So it's a very tricky scenario to go after the customers at that stage, our customers at that stage.
So instead what we did was what if these businesses could actually start with charge B, so one, we add value when they are not making money.
So that is why the $50,000 freemium tier makes sense for them.
And if the idea takes off, then the idea is already validated.
Where your first $50,000, once you make the first $50,000 in revenue, you are probably at already $3,000 $5,000 in recurring revenue.
And then the $99 that you would pay, you know, that you've already been with charge B, you know, where we add value.
And then it will not be such a.
It will not feel like a burden to actually pay us.
Right.
And that's a smooth transition and it creates a win win scenario.
So that's the idea behind our freemium model.
So it's not something that we just stumbled upon from the beginning.
It came from learning and making a lot of mistakes around pricing and all that.
And then learning with our customers.
Yeah.

Omer (11:24.880)
And we're going to talk about pricing.
That's something I would like to have a conversation with you about.
But let's start with kind of going back to before 2011.
How did you guys come up with the idea for this business?

Guest (11:40.320)
So I come from engineering background.
I did my B in computer science and we started the business with three, four co founders.
All four of us come from engineering background.
Three of my co founders worked at Zoho from the days it was called Advent.
So we all, each of us have more than 10 to 12 years of experience either building products or I come from services background, working with Fortune 500 customers and implementations, product implementations.
But for a very long time we have watched one is the three co founders were part of the journey of Zoho where they were part of a product company that was actually solving problems at a global scale, but serving the Fortune 5 million, as we call it, the early stage business.
We have always been inspired by either one Zoho's journey.
And then second is I used to be an avid follower of Joel Spolsky's Joel on software.com I think right from 2002, 2003 when he started writing.
And it was beautiful to just see somebody thinking about bringing some very smart people, giving them a problem, and then see them solving the problem really, really well.
So he would actually talk about his role as someone who's just there to get the chairs out of the way so the smart people can solve a problem.
And that was our inspiration.
So one of the co founders was Raja Raman.
Is Raja Raman.
And we did that engineering together.
We were classmates.
Right.
From engineering.
So we know each other for now, 17 years.
So we have always wanted to start a company.
And so it was not idea first.
It was more of, yes, we want to build, learn how to build a company together and then we will figure out what problem.
But by the time we actually could save up enough to have the conviction and the courage that, yes, you can actually start with your own money.
It was 10 years before we felt like we had enough savings.
And the nudge came from a lot of market forces.
Right?
One is Heroku engineered AWS was making it really, really cheap to actually start a business.
And you could very clearly see that by 2010, SaaS was taking off in a big way.
It was still early, but then you could see that that was really happening.
And pretty much everybody was building software, was building in the cloud and subscription as a revenue model.
Recurring as a revenue model was also taking off.
So it was a convergence of two, three things you could very clearly see is an opportunity.
Then it was a matter of what problem do you solve in the space.
Then we looked at two, three ideas to say, okay, now what is that that we can solve in this space?
We just picked subscription billing because we saw that this was still a wide space because payment gateways were focused on building highways on the Internet, like companies like.
I think at that time, Stripe was not there.
But Braintree was already trying to solve this when we started.
But.
But payment gateways are focused on building the highways right?
Even now, Stripe.
That is what Stripe does, focused on developers and allowing you to actually build solutions.
Then there were two or three other ideas that we saw, but very clearly the problem was we saw a clear underserved segment all the way from early stage to mid market and enterprise.
So we thought, okay, we can start with early stage mid market, which is our sweet spot, and then build a solution together with our customers.
And that is how we picked this.
In hindsight, I'm able to tell all of this as if we knew what we were getting into.
But then at that time, it was more of, yeah, looks like recurring billing is something that everybody needs.
A lot of people are actually still building subscription components and then figuring out how to collect payments.
Let's just see how to build it.
Right Is how it started.
But I'm now able to give some kind of a coherent answer in hindsight.

Omer (15:20.030)
So you guys talked for about 10, 10 years and saved up before you were ready to say, okay, we know we want to work together, we know we want to be in, we want to have a business.
We're still looking for an idea and we're saving up before we get to a point where we're confident enough that we can take the leap and know that we have enough funds there to bootstrap for a while.

Guest (15:44.910)
To some extent, yes.
So we were just saving up because we knew that at some point we are going to start.
Right.
It was more of golden handcuffs in your job because one, you are thoroughly enjoying what you are doing.
And I used to actually live in different places because of the nature of my job.
I lived in US for three and a half years in Indiana and decided to come back to India because at some point I wanted to start up.
By end of 2009, I came back to India and my co founder Raman has always been in India building product, being part of the product journey.
But it was more of the nudge, had to come from somewhere to say, okay, you need to start, right?
Because there is this inertia to quit and start a company because you are always, you are happy where you are and then you're already doing things and you get paid really well.
It was more of, okay, you need to take the leap of faith some at some point of time before you figure it out.

Omer (16:34.760)
So you had this idea around, okay, there looks like there's a need around solving the subscription recurring revenue kind of problem.
Did you kind of decide at that stage we're going to build something that sits on top of Stripe?
Did you kind of see it maybe in the early days as an alternative to Stripe?
Like how kind of clear or fuzzy was your thinking about the way you position the product then?

Guest (17:02.590)
Great question.
This used to be the confusion, right?
Are we a payments company?
Are we a SaaS company?
Where does our strength lie?
Yeah, we see ourselves as somebody who can actually solve problems for business users.
And so we don't see ourselves as a payment experts or payments company.
So clearly from the beginning it was obvious to us that we are not going to be a payments company.
We would actually leverage the existing ecosystem of products that are out there and build on top of that is how we have always approached it from the beginning.
Because that's just not our core expertise.
Our strength lies in actually understanding deeper about the business use cases and building solution around that.
So it was very clear to us that, okay, we are not going to be a payments company.
We will build on top of payment gateways for that reason.
It was just not our strength at all.

Omer (17:47.920)
Okay, so you sort of decided what the focus is going to be, what the problem is that you guys are going to solve.
Solving subscription Recurring revenue is a big problem to solve and you've got a group of founders who are all engineers.
So you're probably itching to code and start building something.
How did you decide what you were initially going to build or what part of that problem you were going to solve?
Did you have some kind of mvp?
And if so, what did that look like from day one?

Guest (18:23.510)
As a first time entrepreneur, right, we made pretty much all the mistakes that we could actually make at that stage.
In hindsight, if I were to do, if I know what I know now, I would actually have a much, much leaner MVP at that stage.
But we tried building something at least more comprehensive, starting from subscription management through invoices and the recurring payment pieces, with even lot of exceptions and use cases, we kind of tried to launch an MVP which was better than what you would build internally for a company at maybe with 100 or 500 customers.
So we could have actually launched an MVP with much lesser use case, much less number of use cases.
So we did build a solution which was actually spanning across all the three core pieces in the initial case.

Omer (19:19.860)
And so what was the consequence of that was that aside from presumably it just took you longer to build the product and get it out there, what was sort of the downside of taking that approach?

Guest (19:34.410)
The time itself.
Right.
So the time to launch, it took more than 12, 15 months for us to actually launch.
Even the first iteration, which we could have actually done that in six to nine months, we should have cut the time in half.
And then the second aspect is anytime you are trying to bootstrap, your biggest concern is actually the, the time.
And time is one resource that you don't get back when you're bootstrapping.
Everything takes twice as much time because of some of these kind of mistakes.
And everything costs twice as much because there is also the opportunity cost involved that we need to factor in.
But early stage, you don't think about that.
We think, okay, we are building it ourselves, we are not paying anybody, so it's okay.
But that's not the case.
There is an opportunity cost together for all the team members.
So I think all of that needs to be factored in when we are actually doing this.
And then when you actually test it out and throw it in the market, you learn so much more.
So even after 18 months, when you are actually launching your early iteration, what you realize is the customer's behavior.
As an engineer, you tend to think very rationally, thinking, oh, so I have these features and then this will be attractive to my prospects.
Or customers.
But the buying behavior of the customer is very different.
Right.
It's very irrational or it only starts from the most acknowledged pain points from a customer perspective.
And they are only going to look at choose you based on the two or three pain points that they see that you are solving.
So even if you have like 100 use cases that you solve, they are probably picking you because there are two or three major pain points that they would like to see solved.
Actually understanding that requires a lot of customer interviews and we should have done spend more time trying to figure out what value proposition that we should build for our early adopters.
And I think those were some of the some mistakes that we should have avoided so that we did not actually come up with much larger mvp.
There are some obvious benefits to it, but the downside is also much higher.
Yeah.

Omer (21:33.570)
So who were you talking to in those 12 to 15 months?
I think you said that when you were building the this mvp, where were you getting the requirements from?

Guest (21:44.770)
Yeah, so that was actually the biggest, best part of actually the learning experience for us.
It gave me a training ground to actually understand more about the space.
Because when we were building the product one, we had made the decision that the three other guys will actually build the product.
I took care of everything else.
So which means that I used to hang out in all the forums, including Hacker News, Stack Overflow, the payment gateway forums, Quora and every other place where people are actually discussing recurring billing as a problem.
If you looked at sometime in 2011, even in 2012, people used to complain a lot about recurring payments on top of PayPal and Braintree or authorized.net and other payment gateways because people do not know how to actually implement it.
If you actually go look harder and then into all these forums where people were discussing these challenges in the absence of your solution, they still need a way to solve that problem.
What I used to do was actually hang out in the forum and then be a good community user by actually trying attempt to solve the problem for them, searching how they can implement it.
Now that gives you an opportunity to engage with users to learn what pain points they were actually going through and what is it they would like to see while trying to solve it.
There were opportunities where we could actually get on a Skype call with certain people and then say, okay, this is how you could approach it.
Then they will definitely be curious to understand what is it that you do.
I used to say, okay, so here is what we are building, we are solving the same problem, but here's how you should do it because we are some time away from our beta launch.
But if you're interested in our beta, then we'll be more than happy to get you on board.
And that is how we used to recruit all our 300, 400 signups before we actually got ready for the launch.

Omer (23:22.970)
Were you hanging out in those forums because you had decided, I'm going to go there and find customers, or was it you were going there because you wanted to learn more about the space and then realized that it was a place to potentially find customers?
Just curious.

Guest (23:43.510)
Yeah, it was more of my curiosity to actually understand the problem space itself that was leading us there.
I didn't know that this is how you actually discover customers.
I was actually learning the aspects of how to actually acquire customers by reading about everything about inbound marketing from HubSpot.
And I was actually reading about all of that and some of the lessons that they were talking about, and they were practicing it as they were building the company at that stage.
I think it just resonated with me that, okay, so this is what you're supposed to do.
And I was trying to figure out what we should actually do when it comes to inbound marketing.
And obviously one of the key things was to talk about a problem that can resonate with an audience.
But where do you discover what problem to talk about?
You need to actually discover what problems people are really going through.
The only way is to find out.
And because we are actually building in a remote location like most of us are, very few are actually building in the Valley.
It is important to actually figure out ways in which this constraint naturally forces you to figure out other ways of doing it.
So I just stumbled upon the forums where you are hanging out and then learning that, okay, so you create a lot of Google alerts to look for anything.
Wherever somebody is mentioning recurring billing, look for forums where they are talking about keywords like authorize.
Net ARB module, which is automated recurring billing module.
So I used to like Google alerts for all these keywords and then look for opportunities where people are talking about it and then jump in and then figure out, okay, so what is this?
What is this?
What is this?
And I think it was virtuous cycle.
So that's good.

Omer (25:13.000)
And that turned into sort of the primary way that you acquired the first hundred or so customers.

Guest (25:21.160)
That is right.

Omer (25:22.200)
It's awesome.
So you talked earlier about the insights of you get when you put the product in front of a customer and maybe there might be one or two specific pain points that they care most about which drives their decision on whether they they buy your product or not.
Is there an example that maybe you can share with us on something you learned about the product?
Maybe you know, you've built this mvp.
You get it out there and then you get these insights from your customers, which maybe surprised you.

Guest (26:01.860)
So, as an engineer and then somebody obsessed with the problem, we were focusing on specific aspects we think is important, right?
Case in point is we thought, okay, we need to cover as many use cases as possible when it comes to subscriptions so that it becomes easier for you to manage when the exception happens.
But when you talk to the customer, you realize that they have not seen that problem at all yet.
You are trying to sell a futuristic problem that they have never encountered.
So obviously they're not going to relate to it.
But what resonates with them is there are aspects which they have not encountered yet, but they definitely have a strong opinion on how they want to serve their customers.
For example, when we thought we were covering so many use cases around subscription exceptions, the user was obsessed about how am I going to have a great checkout experience and can you deliver me, give me a hosted checkout page that will just take care of the security aspects of collecting card information so I don't have to build it.

Omer (26:57.060)
Interesting.

Guest (26:58.180)
We thought if we give an experience where they can embed the page inside their website, they might want seamless experience, so they will do all of that.
But they were not worried about it, right?
They don't even have a few customers, so they were like, no, that's all right.
All I want is you take care of my biggest concerns, which is I'm not an expert in security.
Just give me a page that looks actually good and makes me look good before my customer and as long as you deliver that, that's all that matters.
They didn't even worry about either asking how many use cases you cover, what exceptions you can handle in subscriptions.
None of that they were worried about.
Can you just make this part simple?
And if you can do that, then I'm all in.
And then that surprises you that they have not even evaluated your product thoroughly.
They are actually picking you for one reason only.
And each customer, it's a different vantage point from which they come.
And then they pick you for one reason.
And that is still true, right?
Even at a stage where you sell to enterprises, it's still the same.
They give you that one.
Or when you actually ask a customer what made you look for our solution, they will actually tell you what they are looking for.
And that is all they care about before they go deeper into your solution.
Of course it needs to cover all the other things, but.
But the reasons why they pick you are very different from what you think will sell better.
And that just surprises you.
As a first time entrepreneur, you shouldn't be spending so much time on that.

Omer (28:25.980)
Presumably it's very different from an early stage business or a new business and what they're going to ask of you versus somebody who maybe has, they've got over a thousand customers, they've got the subscription, the recurring revenue in place, and now they're starting to experience those types of problems that you talked about earlier.
They're probably going to have a very different set of needs that they're going to want to have solved by your product.

Guest (28:59.750)
That is correct.
Right.
So depending on the stage of the business, the reasons why they pick you changes completely.
So it's impossible for you to actually say, when I launch, I will be ready for two, three segments of customers who are in different stages.
So it's important to actually figure out, you can either be like, okay, so I am going to build a solution for enterprises, or you focus on a very narrow segment where you can find very similar customers again and again before your product is ready for the next segment.
So it's not just like whatever you build will actually be fit like a glove for every segment of customer.

Omer (29:35.090)
Now you talked about how you were trying to work with new businesses and startups by giving them, you know, hey, the product is free, super low friction, very easy to start using our product and then once you are making money, it's hopefully going to be a no brainer for you guys to want to pay because later down the line maybe implementing is going to be a bit more challenging.
And that makes total sense.
But I also wondered, what about the businesses that you're selling to who already are experiencing those problems in the earlier stages of the business.
What was some of the pushback you were getting from those customers about implementing chargebee?
Was it like, you know, you tell them about the product and people are like, oh man, I've had this problem for so long.
Yeah, I want to, you know, I need this.
Or was it more like, yeah, I have these problems and I know I need to do this, but it's a big headache and I'd rather not think about it?

Guest (30:44.940)
Yeah.
So the support actually is a beautiful window.
So we never used to have a salesperson, right?
So we used to sell.
There was never like in the early stage you don't have a sales Channel, all you have is support as your primary channel in which you communicate with your customer.
And interestingly, the objections used to vary and the way I look at it is it's always the peeling away the onion, right?
You can only take away some of the objections one at a time as you come across.
So for the growth stage customers, where the ones with hundreds of customers, the objections used to be slightly different in terms of what they were looking for in the solution.
It also changes by geography of customers.
Some of the European customers used to ask questions like billing is such a critical component, what if you run out of money?
And where are you guys hosted?
Where is your company incorporated?
What are the terms of service I'm dealing with?
From the beginning, we actually set it up as a C Corp. Delaware company, as a parent company and India company is a subsidiary.
So Chennai.
Even though the founders, we have never shied away from actually telling everybody who we are and where we are located.
But from a customer standpoint, we had to put them at ease in terms of the entity they are dealing with because of the sensitive nature of the product that we are building.
We didn't know what we were actually getting into in terms of some of these aspects.
It was very interesting to hear from them saying what is the entity terms of service?
Which entity am I dealing with?
So we set up a C Corp Delivered company from the beginning, are you PCA compliant?
Where is your service hosted?
So we were built on top of AWS and hosted in North Virginia data center.
And that actually put them at ease.
Then the next question used to be, so how's your doctor plan look like?
What does your disaster recovery plan look like?

Omer (32:32.660)
Did you have one at the time?

Guest (32:35.540)
Well, we used to have great uptime, so I used to sell based on the status.
So from the beginning, thankfully, because of the prior background of actually building SaaS products earlier, we used to have some good practices around the way, used to manage all the infrastructure and all that.
So that was very helpful.
Where we always used to optimize for 100% uptime, even when we actually made changes to the production environment.
So which means that it was always a hard deployment and we were optimizing for 100% uptime from the beginning.
Right from the beginning.
So those practices really help to showcase that, hey, this process, we really optimize for that simply because we cannot say, oh so five minutes we are going to bring it down.
And for those five minutes nobody can build, buy from.
None of your customers can purchase anything.
We cannot say that even as an early stage company, which means that these practices were super helpful because your experience now comes into that becomes your strength because of the nature of the problem you are solving.
And that was helpful.
But the objections used to be surprisingly very different.
Sometimes nothing related to your core product.
Something like some crazy things like people asking what if you get bored tomorrow and say we are actually going to stop supporting what happens.
So I wrote a business continuity plan to tell them that we start an experiment, we are really serious about wanting to build a business and don't worry about the Runway.
We have thought through it and we understand the weight of the problem we are solving.
So we have a plan to keep it lights on for two years.
Even if we say tomorrow that hey, I cannot support it or we are not going to pursue this.
And then once the business gains traction and then there is a lot of peer validation that happens and all of that, those objections go away and then newer objections come up.
I hope that answered some of some parts of your question.

Omer (34:29.020)
Yeah, no, no, it does.
And those are really, really interesting insights.
And you know, because you guys are solving a problem that clearly takes away a pain for a growing business.
And once I think people understand what the product does, it's really a no brainer that they need a solution like that.
But at the same time, once they start using chargebee, you become an integral part of their business.
Right.
So they need to have that confidence that the business is going to be around, that this isn't just a bunch of geeks who wrote some code and thought it was a good idea and next week they're going to be interested in something else.
And obviously now that's a lot different because over the last few years the business has continued to mature and you've got customers all over the world.
And so there's a lot more kind of social proof out there.
But I can totally understand that in the early days where you could kind of have those kinds of objections.

Guest (35:27.720)
That's true.

Omer (35:28.600)
We talked a little bit about pricing and I know that you had some, some lessons that you had learned there.
And it's an area that I think most SaaS companies struggle with.
Right.
In terms of when you're starting out, how do I price my product?
Do I just look at my competitors and do the same or do a little less or whatever?
And as you start to grow, what kind of testing should I do?
And you discover all kinds of things that maybe push you in a completely different direction in terms of the way you think about the pricing model.
And I guess you know, over time that continues to evolve.
But what has your experience been?
And you know, is there maybe like one lesson that you can share from us that maybe you learned something useful by pricing the wrong way?

Guest (36:24.600)
Right.
Yeah.
So the current pricing that you see, including the freemium, is actually the fourth iteration of ChargeBees pricing.
So we made all the mistakes that we can, we shouldn't be making.
Meaning when you try to price yourself low, the biggest learning is that especially when you are dependent on an inbound model where people browse your website and then purchase your product online, it's important to actually understand the price sensitivity of the customer or the similar products that they purchase.
So what I mean by that is when we actually build our product, we actually, in the back of our mind, we all know to a large extent what is the sweet spot or the type of customer who is more likely to purchase our product.
And if you think about what else do they buy, that actually gives you a good insight into how you should price your product.
For example, if you are actually building a product that is more likely to be used by someone who will also purchase a Marketo, then you are actually thinking about someone who is looking for a premium product which is slightly still old school compared to all the other solutions that exist, but willing to pay like $2,000, $3,000 for something which they are probably buying because of word of mouth or maybe somebody else, because that is what they have been trained on and they know that it's going to work for a specific use case.
Now, if you think about it, it's not really a price sensitive customer that you're dealing with, but someone who actually prefers, probably a concierge service, are willing to pay a premium provided you are able to demonstrate the value.
There is no reason if you actually try to price your product at $49 for that segment and then say, now I have an integration with Marketo, they are actually going to judge you very differently.
Pricing is actually the biggest learning for me is pricing is a clear filter for who tries your product, if you have a free trial, and who ends up purchasing your product.
So it is very important to get it right and understand that it can actually be a clear filter for your quality of leads and especially for quality of conversion, because if you price it in a way that it's too low, you are going to attract a certain type of customer.
A case in point is we used to have a freemium model which used to offer 10 invoices for free per month and that was actually attracting a lot of Consulting and service businesses which were only serving less than 10 clients each month.
And they were thinking, now I have discovered this free billing system which will allow me to always invoice 10 of my customers on a recurring basis.
10 clients is all they have.
In fact, the terminology they will use is clients, not customers, because they are used to consulting and services.
And you as a business, as an entrepreneur and while building the business, you are thinking, I'm having this premium because now I'll get hundreds of premium customers and hopefully get tens of paying customers some point of time.
But pretty much most of your customers are coming in thinking this is a free product instead of freemium product.
So you really need to think deeper about the value metric based on which your customer is trying to use your product and the reason why they are picking you and how you are actually pricing it, thinking, what outcome do you want out of that segment?
So we actually, after six months of experimentation, we learned a very hard lesson that all the customers that we were actually bringing in, we are thinking this is free.
So we shut it down, meaning we shut it down for new signups, honored all the existing customers, and then we rolled out the.
We just continued the $49 pricing at that time, and our conversion was still steady.
We were having the same number of signups and all was good, but we couldn't move away from the.
And after a year and a half, two years, you learned a better lesson and hopefully we actually tried it in a different way.
And then now this is working like for the last two years.
But interestingly for me, the biggest lesson is how important pricing is, simply because even Google Analytics will tell you that apart from Homepage, if you have a pricing page, that's the second most visited page and that tells you something.

Omer (40:25.340)
And do you continue to ab test your pricing or this iteration is it kind of stays fairly stable until you sort of next decide you want to make some changes.

Guest (40:38.300)
We do test it right, but based on certain segments and sometimes especially at the scale and above stage.
We used to have, I think, a $399 pricing that we changed into finite $900 pricing.
But the way you actually change it is we also change the value metric around it.
Instead of actually offering less number of invoices or less revenue on a scale plan, we actually increase the price and also offered a little bit more in value.
But by doing that, you're testing the price elasticity and the objection from that segment of customers.
So it never stops.
The pricing experimentation never stop.
And it's something that is Actually an ongoing conversation with your prospects to try and figure out things.
Right.
Sometimes you may not even change pricing for everybody, but there is always some element of pricing that you should always be testing.
That's one of my biggest lessons.

Omer (41:30.660)
Yep, totally makes sense.
Now I know content marketing is also a big driver of traffic and leads for you guys.
And I know it's something that you started pretty early.
Like while you were still in the early days of building out the product, you already started thinking about content marketing.
Can you kind of give us a sense of like how effective is that today for you as a business in terms of maybe percentage of like leads it generates or whatever.
I don't know, just whatever metrics you can share.
And then secondly, take us back to the early days and how you sort of started the process.

Guest (42:13.550)
So to give you the impact today, pretty much all the leads and all the conversions happen through inbound channel for us.
And 75 percentage of these leads are all organic.
And we get about 25% of our leads through inorganic channels and primarily AdWords.
But content marketing plays a huge role in how you also optimize and complement AdWords.
That is how the impact today.

Omer (42:36.480)
So it's huge.
It's a huge part of your business.

Guest (42:39.200)
It is because it's intrinsic to your underlying business model and how you even acquire customers, how you serve customers and how you price, all of them are tied together by design or default.
I think the way we actually think about acquiring customers actually plays a huge role in terms of how we evolve with our customers, in terms of how we are able to even use pricing as a leverage later.
Because this has a huge bearing on that.
Yeah, if you have to go to all the events and then meet the customers and do feet on street sales or something like that, we just cannot afford to actually price our product.
In a way we are able to go after a very large market.
Right all the way from early stage.
The reason, only reason why we are able to actually do freemium and even have a $99 pricing and serve early stage businesses and all the way through different stages is because simply because of this design that customers discover us and that's very integral to everything.

Omer (43:33.310)
So you guys decided very early on that content marketing was going to be an important growth channel for you.
How did that start?
Like, did you guys just start blogging and what happened?

Guest (43:47.150)
So it's again by design, because of a constraint that as founders, this is home, Chennai was home.
And this is still an evolving ecosystem where there are good SaaS, companies coming around us but then not enough like Valley, so that artificially that actually naturally forces you to actually think about how are you going to acquire customers.
So for me, support was a very interesting channel to learn about what problems our prospects were actually talking about and then what problems they were asking us questions.
And once you actually learn from this, that actually naturally feeds ideas in terms of things you can actually talk about in your content.
So of course, most of the content that you write in the early days is actually going to be pretty bad.
But you need to start somewhere to actually learn how you do that.
That's the only way we actually improve.
So when actually customers were asking, so I have this checkout page.
How do I ensure that I get the most amount of conversion for subscription?
What are the things I should pay attention to when my checkout page.
Now that actually gives you ideas for what you should write about.
When it comes to the checkout experience, there are some teams where very naturally some of your engineers will actually write content that appeals to engineers.
But if that is not your strength, you have to figure out what you would write about.
In our case, we were writing for business users because that is what came naturally to us.
So we would actually use support as a channel to give us ideas.
And you use all these ideas to actually think about how to write the content.
And then we used to write about this.
One key aspect that helped was to figure out how this content will help you find an audience.
Because one is to be just a content writer.
The other aspect is to be a content marketer.
If you want content marketing to work, discoverability is extremely important, not just writing.
So to figure out discoverability, it is important to actually learn the fundamentals of SEO and how SEO works, which leads to knowing your category in terms of are there people searching for your product with intent on Google?
It can be even associated keywords and all that.
And Google AdWords is actually beautiful.
The Keyword Planner utility, which is a free utility within Google AdWords is a fantastic way to learn how much search is really happening.
For all the associated keywords for which you should be ranking and how many people from which geography, what demography, they tell you everything that gives you like the top 2050 keywords for which you should rank, right?
One of the simplest example is people were just looking for payment gateways options by country.
So if you are in Singapore, people were looking for which payment gateways are available.
For me, as an early stage entrepreneur, what options exist in Singapore?
So I wrote a blog on payment gateway options for companies in Singapore and that still drives most of the traffic for us from Singapore.
So it's a mix of skills that you actually pick up, but all of them tie in together.

Omer (46:50.220)
I got to say, I was checking out the chargebee blog.
I think it looks great.
I mean, overall, you guys just have a really well designed site and it's clear that you guys are putting a lot of effort into the content marketing.
And I presume you have a team of people now just working on that.

Guest (47:10.710)
That is correct.
Right.
It has evolved over a period of time.
As an early stage founder, when you are hustling, you figure some of these basic aspects of what will work for you from a model perspective.
But the things that work in the early stage, they don't necessarily continue to work if you.
That is, writing is not my core skill.
So which means that there are people who actually do a phenomenal job later.
Right.
So it's important to actually discover the channels and the mechanisms, but later on it's important to actually hand it over to the people who will do it better than you and actually implement it much, much better.
But the discovery is where the is something that we need to go through.
Where we learn the hardest part about actually designing what channels will work or what business model will work for us.
But later on, the team actually does it better than us.

Omer (48:00.950)
Yeah.
Yeah, that's good stuff.
Can you give us a sense of the size of the business?
I don't know if you guys talk about revenue and if not, like size of team or any other metrics, you can kind of give us an idea or customers.
That gives people a sense of where you guys are right now.

Guest (48:17.910)
Sure.
We are a team of 121 people with three people in San Francisco and 118 folks in Chennai.

Omer (48:27.110)
Wow.

Guest (48:27.810)
We serve over 6,000 customers globally in 53 countries.
And we process, I think about easily over half million transactions each month and processing over $750 million of our customers revenue annually right now.

Omer (48:44.210)
Wow.
So 2011 you launched and how long was it?
It was the four of you, the founders.
How long was it before you hired your first employee?

Guest (48:55.740)
So one month into the company, we hired our first designer.
So for the first six months, it was just five of us, including the first employee.
And after that we started hiring a few developers, but we hired directly out of college, about three folks from college for about a year and a half, we were bootstrapped.
So we were less than 10 people for more than a year and a half and less than 15, 20 people for more than close to two and a half.
Three years.

Omer (49:20.550)
And then I think you raised like 5 million in 2015.
And so I presumably that really helped to sort of drive the growth and the hiring even faster.

Guest (49:33.190)
That is correct.
Once we started onboarding customers, billing is one of those problems where you come in the way of the business if you don't have even certain some use cases covered.
Right.
So which means that the biggest learning was we had to accelerate our engineering and the product development so that we keep up with our customers growth.
Because you cannot onboard a customer who is extremely ambitious but not support their use case.
So which means that there is this need to balance the product roadmap and also cover that with the things necessary to acquire new customers versus keeping the existing customers super happy and delivering on that promise.
So the funding was essential.
It was extremely important for us to be able to ramp up the team, especially on the product engineering side, to invest in the product and continue building out the roadmap with our customers.
So now 60% of our team is actually product engineering and design with more than 65 people.
And then there are about 12, 15 folks in customer service and about 10 people in sales.
10 people in marketing, inbound marketing.
And then the rest of the day.

Omer (50:41.630)
Do you ever sort of look back and say to yourself, it wasn't that long ago when we were just still looking for an idea for a business?

Guest (50:50.030)
That's true.
Yeah.
It still feels like the day we just started.
Right.
And the best part is we did not start with an obsession to the problem.
Right.
We wanted to actually just come together, try and solve a problem together and learn how to build a business.
And it surprises you how much the the problem now takes over and becomes an obsession.
More than the original goal of actually starting out, where we just learn how to build a business.
Now the problem has taken over precedence over everything else and we are now obsessed about the problem and want to solve it better and better.
Now that is what drives us today.
Now we are doing everything around that.
It actually is very surprising.

Omer (51:32.030)
All right, let's get onto the lightning round.
I'm going to ask you seven questions.
Just try to answer them as quickly as you can.

Guest (51:39.710)
Sure.

Omer (51:39.910)
Okay.
What's the best piece of business advice

Guest (51:43.270)
that you've ever received as an early stage guy?
When we started out, my mentor said, just make sure you have 36 months of Runway before you start.
Or at least 24 to 36 months.
Just make sure you don't run out of money.
But if you just stay longer beyond the 24 months or 36 months, you will Figure out something.
And I think it has never been truer.
The longer we stayed in the market to persist, we were able to somewhere you just figure out what problem you're solving and get people to actually pay you some money.

Omer (52:13.940)
What book would you recommend to our audience and why?

Guest (52:18.020)
Mindset by Carol D. Beck.
I've been reading this recently.
I think pretty much all the decisions, the framework with which we think, the way we deal with people, pretty much all of that revolves around a growth mindset rather than.
I think she deals with it beautifully in this book.
I would highly recommend it.

Omer (52:35.290)
That's a great book.
And not just for entrepreneurs.
For parents as well.

Guest (52:39.010)
Right?

Omer (52:41.010)
What's one attribute or characteristic in your mind of a successful entrepreneur?

Guest (52:46.770)
Persistence to keep at the problem.
Actually you get inspired by a problem than actually getting tired of dealing with problems.
I think as long as you actually enjoy solving that problem and persist to solve that, I think a lot of things fall in place.
So persistence I think is one important characteristic.

Omer (53:06.920)
What's your favorite personal productivity tool or habit?

Guest (53:11.080)
I think wearing writer's hat just to brain dump really helps you put your thoughts into words without editing.
So for me, just doing brain dump whenever I need to get things done, just doing brain dump of ideas by without editing and just writing it down really helps.

Omer (53:29.170)
Yeah, I'd love that.
And I would add that I found that doing that with a paper and pen is much more effective than sitting in front of a screen.
I don't know why.
Just for me, I found that better thoughts come out faster.
I just add that.

Guest (53:45.970)
Yeah, the muscle memory, right.
Of not getting distracted.
If you are in front of a computer, there are chances of actually getting distracted as well.

Omer (53:52.430)
Yeah.
What's a new or crazy business idea you'd love to pursue if you had the extra time?

Guest (53:57.950)
Actually if I were not doing charge B, I would go after the obvious inefficiency that exists in a lot of developing market which is around all the paperwork, the manual work that goes on around managing the operational pieces of running a business.
It drives me crazy all the time.
Like the accounting.
And even though we are solving all the accounting related problems for accounts receivables, I see that the everyday accounting process that is actually there, the problem that exists in developing countries is actually still a problem that is worth solving.
There is too much weight to too many inefficiencies around that.
That's something I would really love to solve.

Omer (54:37.650)
And I think for people who are in the US or Europe or somewhere like that, I think you don't really Understand that unless you travel to those countries and you realize, oh, my God, how much harder it is to get anything done.

Guest (54:55.120)
Right, right, right.
Yeah.
We take a lot of things for granted when we actually travel.
Right.
Especially in US And a lot of other places.
But you actually see that there is so much effort that goes into the everyday things of actually running a business, like the things that you need to comply from governance standpoint and compliance standpoint.
All that is just way too much overhead that can be simplified with a lot of common sense.
It just said way too much inefficiency that is actually there in the system today.
And those are obvious opportunities because nobody has attempted to say that's bad.
Right.
That should be a better way of doing it.
There are so many obvious inefficiencies that exist the system, but it just takes time to actually solve them one by one.
Yeah.

Omer (55:33.590)
What's an interesting or fun fact about you that most people don't know?

Guest (55:37.800)
Interesting.
So whenever I play games, be it tt table tennis or badminton even, I'm not really, really good at it.
But then.
So what I find surprising about myself is that I just generally get into the habit of actually bullying people with all the.
I get into the whole verbal thing of actually while playing because I'm just competitive, but I just compensate my lack of skills by trying to get into verbal volley.

Omer (56:05.130)
I like that one.
And finally, what is one of your most important passions outside of your work?

Guest (56:11.050)
Solo travel?
Driving my car.

Omer (56:13.450)
I like doing that, too.

Guest (56:17.290)
Thankfully, my wife allows it from time to time.
She gets annoyed that, okay, I suddenly say, looks like I would like a day and a half of just driving.
And then she'll be like, okay, so you're going to leave two kids and me at home on a weekend and then just go all but be all by yourself?
Like, yes.

Omer (56:34.670)
Oh, wow, you do you.
I thought you meant like driving for an hour by yourself.
You go for days.
Oh, man.
Yeah.
You have a very understanding wife.

Guest (56:44.750)
I do.

Omer (56:47.470)
All right, Chris, it's been a pleasure.
You know, I really enjoyed this chat.
Thank you for sharing the story about Charge B and sharing, you know, your experiences and sort of the.
The lessons that you guys have learned along the way.
If people want to find out more about Charge B, they can go to Charge B.
That's bwee.com and if they want to get in touch with you, what's the best place for them to do that?
Where do you hang out?

Guest (57:14.230)
Email is the best way.
Krisharge b.com K R I S H Feel free to drop me a note if you want to exchange notes.
My Twitter ID is CB Krish Charlie.
Bravo, Krish.
Cool.

Omer (57:27.780)
I'll include a link to those in the show.
Well, not the email, but I'll include a link to the Twitter handle in the show notes.

Guest (57:34.340)
Sure.
Thank you.

Omer (57:35.420)
Cool.
It's been a pleasure and I wish you and the team at chargebee all the best.

Guest (57:39.380)
Thanks so much, Omar.
It was fun talking to you.
Thanks so much.
All the best.

Omer (57:42.580)
Cheers.